The Pelindaba nuclear reactor plant near Pretoria. Picture: THE TIMES
The Pelindaba nuclear reactor plant near Pretoria. Picture: THE TIMES

The Nuclear Energy Corporation of SA (Necsa) group of companies are in crisis and must be “reshaped” now that the nuclear build programme looks likely to be pushed out into the distant future, Rob Adam, the new chair of the board of directors, told MPs on Tuesday.

Necsa made a loss over the past two years, as did subsidiary Pelchem, which manufactures fluorochemicals . Another subsidiary, NTP Radioisotopes, which manufactures products for nuclear medicine, was profit-making.

Necsa CEO Kelvin Kemm was suspended and the board was replaced by energy minister Jeff Radebe in November. 

Adam, a previous CEO of Necsa, told parliament’s committee on energy that, with the exception of NTP Radioscopes, the companies of the group should be “reshaped”.

“For the best part of a decade and a half there has been talk of a new nuclear build. Necsa has been asked to retain nuclear capabilities over this period and support these by looking for commercial activities. But there comes a point where commercial viability of these entities has to be seriously questioned,” said Adam.

Although the new Integrated Resource Plan (IRP), SA’s long-term energy plan, has not yet been finalised, drafts anticipate that no new nuclear energy capacity will be required in the foreseeable future. 

Adam said the board has to look at what activities are viable across the group. This includes an examination of Pelchem, as well as parts of Necsa. He said Necsa had a salary bill of R800m a year but only received a R500m annual grant from the department of energy, adding that Necsa could not be turned around without looking at the salary bill.

“The board knows what needs to be done but we need to formalise it. Obviously we need to consult with our shareholder and act if the shareholder agrees. We need to use our grant from the department to do what we do well,” he said.

NTP Radioisotopes, Necsa’s most successful commercial subsidiary, was closed by the National Nuclear Regulator between November 2017 and November 2018 over safety concerns. It is one of only four manufacturers of medical isotopes in the world.

“NTP will recover its market; it is a good, healthy entity with good people. Once it is allowed by the regulator to go to full production, it will recover,” said Adam.

The biggest loss-making part of Necsa itself is Pelindaba Enterprises, which manufactures parts for heavy industry. In anticipation of the new nuclear build, it had adapted its workshop to meet nuclear standards, losing other existing business.

Said Adam: “In anticipation of having a lot of nuclear work, it excluded itself from other work. If you apply nuclear standards to ordinary manufacturing then you price yourself out of the market.” He said that Pelindaba Enterprises has only one job in its order book.

Committee chair Fikile Majola said that the crisis at Necsa is a case of “the dysfunctionality of the state and policy uncertainty catching up with us”.

CORRECTION: March 5 and 6 2019

A previous version of the story stated that the Necsa board was suspended when it in fact had been replaced by energy minister Jeff Radebe. It also stated Pelchem manufactures petrochemicals when it actually makes fluorochemicals. 

patonc@businesslive.co.za